Bitcoin Volatility and Merchant Refunds

[malditonuke]

Given that:

• Bitcoin is incredibly volatile at this point, and
• Most merchants need to change bitcoins back and forth with other currencies

It would be great if online merchants could offer refunds for merchandise paid for in bitcoin.  But given the above, with values ranging from $10/BTC to $30/BTC over a 5-day period, how is a merchant supposed to offer refunds?  Two methods come to mind, but I would love to hear other ideas.

Idea 1:  A very short-term damaged-only refund policy.  It would have to be incredibly short, though, since we've recently been seeing btc fluctuate as much as 50% in a day.

Idea 2:  A more normal term, 14-day, 30-day, (depends on the product and circumstances), refund policy.  This could be offered, if the customer is willing to accept more or less btc, depending on the price of btc when the product is returned.  {example: you buy a toy from ABTC Toys for 1BTC today.  you return it in 12 days, when the $/btc has doubled (let's say).  the merchant gives you 1/2 of the btc that you paid.


I'm trying to think of some way to make refunds work while bitcoin is still unstable.  Which idea do you prefer, or have you thought of something else?

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[Sukrim]

At least in the EU as an online merchant you are required by law to offer an unconditional 100% 14 days refund.

If you use BTC as a kind of "transmission medium" only, and have all you goods priced in USD instead of BTC, only converting to BTC at payout if requested, I don't see a real issue. You could then just refund the USD value in bitcoins. If the customer doesn't accept that, he/she has to take the refund in USD via bank wire or whatever.

[malditonuke]

At least in the EU as an online merchant you are required by law to offer an unconditional 100% 14 days refund.

If you use BTC as a kind of "transmission medium" only, and have all you goods priced in USD instead of BTC, only converting to BTC at payout if requested, I don't see a real issue. You could then just refund the USD value in bitcoins. If the customer doesn't accept that, he/she has to take the refund in USD via bank wire or whatever.

i tried to find a source for what you say.  I did find this though:

Online shopping

Returning unwanted goods

7 days to cancel purchase for non-faulty goods

In the EU, you have the right to cancel your online purchase within seven working days.

This seven-day "cooling off" period begins on the day when you receive your purchase.

You can choose to cancel your order for any reason within this timeframe - even if you simply changed your mind.

The seller must give you a refund within 30 days. This refund must include any shipping charges you paid when you made your purchase.

This applies whenever you buy goods outside a shop (for example by phone, fax, or mail order, as well as on the internet).

Although you have a right of refund, you will have to pay the postage costs of shipping goods bought online back to the seller.
Certain products excluded

The seven-day "cooling off" period does not apply to:

plane, train or concert tickets, or hotel booking
food and drink delivered to you by regular delivery (such as a milkman or supermarket delivery).
Sample story

Be aware that you cannot change your mind for some types of purchases

Jane bought a ticket online for a U2 concert in Ireland. She found out the following day that she would have to be out of the country on the concert date, and attempted to cancel her order. However, the online seller refused to cancel the order and give her a refund.

Under EU law you have the right to cancel purchases made online or through other methods of "distance selling" (such as phone or mail-order) within a seven-day window. However, there are exceptions.

With holiday, travel, accommodation, and leisure entertainment reservations, the seller does not have to refund you if you cancel your order.

Private sales also excluded

If you are purchasing goods from a private individual rather than a company, the transaction is not covered by the same consumer legislation. You do not have the legal right to change your mind within seven days of your order.

http://ec.europa.eu/youreurope/citizens/shopping/online-shopping/returning-unwanted-goods/index_en.htm

[malditonuke]

and for the EU, I wonder if the refund policy applies to barter, since dealing with bitcoin is technically barter (i think).

if so, then i guess in the EU a merchant could price in euros.  it's an ugly method though, especially for hardcore-bitcoin merchants.


in the US, a merchant can choose their refund policy.  they just have to make it clear to the buyer.

so i guess my question really applies to merchants under governments without minimum refund timeframes.

[testerx]

It's silly to apply refund rules meant for stable currencies like the Euro to stuff purchased in BTC.  In the real world volatile currencies often don't get used at all and people just use benchmark currencies instead and convert back and forth, so until  BTCs are stable you'll probably have to index your values by USD  or  Euro.

[malditonuke]

It's silly to apply refund rules meant for stable currencies like the Euro to stuff purchased in BTC.  In the real world volatile currencies often don't get used at all and people just use benchmark currencies instead and convert back and forth, so until  BTCs are stable you'll probably have to index your values by USD  or  Euro.

OK, but if you are paying in btc, then who is to say what the $/btc truly is?  I guess the merchant could say that he is charging $100 worth of btc, 'according to yesterday's closing price on mtgox.com'.